Staechelin & Ors v ACLBDD Holdings Ltd & Ors

An appellate court may disturb a trial judge’s factual findings only where there was no supporting evidence or the finding was one no reasonable judge could reach. It must ordinarily assume that the judge considered all the evidence, even if the judgment does not discuss every point.

An agent who has neither acted dishonestly nor in bad faith does not forfeit agreed commission merely because of an alleged failure to pass on information. A failure of that kind differs from a secret profit or a real conflict of interest.

A third party protected by an exoneration clause in a trust instrument need not investigate the trustees’ internal decision-making. Trustees who contract for the trust remain personally liable unless the contract clearly excludes that ordinary incident of trusteeship.

The trustees of the Rudolf Staechelin Family Trust appealed against Morgan J’s judgment after a nine-day trial. The judge held that the art dealer, Mr de Pury’s LLP, was entitled to a US$10 million commission for assisting the sale of a Gauguin painting for US$210 million.

The trustees alleged that Mr de Pury had concealed an earlier US$230 million offer and had thereby breached fiduciary duty. They also disputed whether all three trustees were bound where only two had agreed the commission. The appeal challenged the judge’s factual findings, the rejection of the fiduciary-duty case, and his construction of the trust instrument.

1. Appeal dismissed. Lewison LJ, with whom Lindblom and Rose LJJ agreed, held that the trustees had not met the stringent test for appellate intervention in findings of fact. The trial judge’s acceptance of material parts of Mr de Pury’s evidence, despite reservations about aspects of the evidence of several witnesses, was rationally open to him. His findings were neither unsupported by evidence nor incapable of rational justification.

2. The judge had also given adequate reasons. A judge must explain the basis of the decision, but need not address every argument or give reasons for every subsidiary reason. The Court of Appeal was bound, absent compelling reason, to assume that the trial judge had considered the whole of the evidence.

3. On the facts found, Mr de Pury had not agreed with Mr Bennett to conceal the earlier offer. He had attempted to discuss the matter with Mr Staechelin, who did not wish to engage. Even if failing to approach another trustee could amount to a breach of duty, it did not disentitle Mr de Pury to commission. A failure to pass on information, without dishonesty or bad faith, does not stand on the same footing as obtaining a secret profit or acting under a real conflict of interest.

4. The trust argument was raised too late and unfairly after the evidence had closed. In any event, Article III(E) protected a person dealing with the trustees in good faith from having to investigate their authority or the propriety of their internal decision-making. The agreement bound the trustees. Further, trustees who enter a contract for the benefit of a trust incur personal contractual liability unless clear words exclude it; their right to an indemnity from trust assets is a separate question.

• Court of Appeal (Civil Division): dismissed the trustees’ appeal in [2019] EWCA Civ 817.
• High Court of Justice, Chancery Division: Morgan J held, after trial, that Mr de Pury’s LLP was entitled to the agreed commission and rejected the trustees’ fiduciary-duty defence.